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Tropentag, September 14 - 16, 2022, Prague

"Can agroecological farming feed the world? Farmers' and academia's views."


Through which channels do voluntary sustainability standards affect farm revenue? Evidence from Peru

Eva Boonaert1, Miet Maertens2

1KU Leuven, Earth and Environmental Sciences, Belgium
2KU Leuven, Earth and Environmental Sciences, Belgium


Abstract


Voluntary Sustainability Standards (VSS) - such as Fairtrade, GlobalGAP or Organic - are increasingly used as a market-based mechanism to improve and guarantee sustainability in global food trade. To analyse the actual sustainability impact of VSS, previous studies mainly rely on single-equation models which allows to analyse if (some) VSS work, but not why (some) VSS work or do not work. Hence, little is known about the mechanisms and the relative impacts of these different mechanisms through which VSS actually contributes to farmers’ welfare. In this paper, we analyse the channel of effects through which VSS affect net farm revenue of family farms in Peru. Our contribution is twofold. First, this is the first study that uses a mediation model to disentangle direct and indirect factors through which VSS affect farmers’ welfare. Second, we use nationwide data, which is an exception in the literature, from Peru’s National Agricultural Survey and use panel and pseudo panel methods. We include three VSS (Organic, Fairtrade and GlobalGAP) and focus on two export crops (bananas and coffee) in Peru. Based on the preliminary results we find that, certification mainly affects net farm revenue through higher prices, but these cannot offset the higher production costs to increase net farm revenue. Looking at heterogeneity by standard, we see that this positive price effect is highest for Organic certification. Looking at heterogeneity by crop, we show that the type of crop matters. Our findings point to the need for an integrated approach to improving farmer welfare that not only improves prices, but also increases yields, reduces production costs, and also supports other pathways to improving farmer’s welfare.


Keywords: Certification, impact pathways, indirect effect, mediation model, simultaneous equation systems, voluntary sustainability standards


Contact Address: Eva Boonaert, KU Leuven, Earth and Environmental Sciences, Celestijnenlaan 200e bus 2411, 3001 Leuven, Belgium, e-mail: eva.boonaert@kuleuven.be


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